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The thesis focuses on environmental liability insurance as a representative of various methods of financial guarantee with respect to the environmental damage risk. The environmental risk is explained in the context of the theory of insurance and the specific features of this risk, which may lead to a discussion about insurability of environmental damage risk, are pointed out. The thesis is also aimed at the legal rules in the Czech republic, because there is a close relationship between the environmental insurance and existing legal rules. Last but not least, the thesis also provides an overview of the environmental insurance products available in the Czech republic.

Brownfields redevelopment has been encouraged by governments or the real estate market because of economic, social and environmental benefits. However, uncertainties in contaminated land redevelopment may cause massive investment risk and need to be managed so that contaminated land redevelopment is facilitated. This study was designed to address hydrogeological as well as economic uncertainty in a hypothetical contaminated land redevelopment project and manage the risk from these uncertainties through the integration of the hydrogeological and economic uncertainties. Hydrogeological uncertainty is derived from incomplete site information, including aquifer heterogeneity, and must be assessed with scientific expertise, given the short history of redevelopment projects and their unique hydrogeological characteristics. Hydrogeological uncertainty has not yet been incorporated in one framework with the economic uncertainty that has been relatively well observed in financial markets. Two cases of Non-Aqueous Phase Liquid (NAPL) contamination were simulated using a physically-based hydrogeological model to address hydrogeological uncertainty: one concerns the effect of an ethanol spill on a light NAPL (LNAPL) contaminated area in the vadose zone, and the other is regarding the vapour phase intrusion of volatile organic compounds, in particular, Trichloroethylene (TCE), a dense NAPL (DNAPL), into indoor air through a variably saturated heterogeneous aquifer. The first simulation replicated experimental observations in the laboratory, such as the capillary fringe depressing and the NAPL pool remobilizing and collecting in a reduced area exhibiting higher saturations than observed prior to an ethanol injection. However, the data gap, in particular, on the chemical properties between the model and the experiment caused the uncertainty in the model simulation. The second NAPL simulation has been performed based on a hypothetical scenario where new dwellings in a redeveloped area have the potential risk of vapour phase intrusion from a subsurface source into indoor air because remediation or foundation design might fail. The simulation results indicated that the aquifer heterogeneity seemed the most significant factor controlling the indoor air exposure risk from a TCE source in the saturated zone. Then, the exposure risk was quantified using Monte Carlo simulations with 50 statistically equivalent heterogeneous aquifer permeability fields. The quantified risk (probability) represents the hydrogeological uncertainty in the scenario and gives the information on loss occurrence intensity of redevelopment failure. Probability of failure (or loss occurrence intensity) was integrated with cost of failure (or loss magnitude) to evaluate the risk capital in the hypothetical brownfields redevelopment project. The term “risk capital” is adopted from financial literature and is the capital you can lose from high risk investment. Cost of failure involves economic uncertainty and can be defined based on a developer’s financial agreement with new dwellers to prevent litigation in the case of certain events, such as an environmental event where indoor air concentrations of pollutants exceed regulatory limits during periodic inspections. The developer makes such a financial agreement with new dwellers because new dwellings have been constructed founded on flawed site information, and municipalities may require it if a land use planning approval is required. An agreement was presumed that the developer would repurchase the affected houses from new dwellers immediately, if indoor air contamination exceeded the regulatory limit. Furthermore, the developer would remediate any remaining contamination, demolish the affected houses and build new houses if they were worth investing in. With this financial plan assumed, the stochastic housing price, stochastic inflation rate and stochastic interest rate have been considered to cause the uncertainty in the cost of failure, and the information on these stochastic variables was obtained from the financial market due to its long history of observations. This research reviewed appropriate risk capital valuation methods for hydrogeologists to apply straightforwardly to their projects, with integrating probability of failure (hydrogeological uncertainty) and cost of failure (economic uncertainty). The risk capital is essentially the probability of failure times the cost of failure with safety loading added to compensate investors against hydrogeological and financial uncertainty. Fair market prices of risk capital have been valuated using financial mathematics and actuarial premium calculations, and each method has a specific safety loading term to reflect investors’ level of risk aversion. Risk capital results indicated that the price of the risk capital was much more sensitive to hydrogeological uncertainty than financial uncertainty. Developers can manage the risk capital by saving a contingency fee for future events or paying an insurance premium, given that the price of this risk capital is the price of a contingent claim, subsequent to failure in remediation or in foundation design, and equivalent to an environmental insurance premium if there is an insurance company to indemnify the liability for the developer. The optimal framework of investment strategy in brownfields redevelopment can be built by linkage of addressing and integrating uncertainties and valuating risk capital from the uncertainties. This framework involves balancing the costs associated with each step while maximizing a net profit from land redevelopment. The optimal investment strategy, such as if or when to remediate or redevelop and to what degree, is given when the future price of the land minus time and material costs as well as the contingency fee or insurance premium maximizes a net profit.

Brownfields redevelopment has been encouraged by governments or the real estate market because of economic, social and environmental benefits. However, uncertainties in contaminated land redevelopment may cause massive investment risk and need to be managed so that contaminated land redevelopment is facilitated. This study was designed to address hydrogeological as well as economic uncertainty in a hypothetical contaminated land redevelopment project and manage the risk from these uncertainties through the integration of the hydrogeological and economic uncertainties. Hydrogeological uncertainty is derived from incomplete site information, including aquifer heterogeneity, and must be assessed with scientific expertise, given the short history of redevelopment projects and their unique hydrogeological characteristics. Hydrogeological uncertainty has not yet been incorporated in one framework with the economic uncertainty that has been relatively well observed in financial markets. Two cases of Non-Aqueous Phase Liquid (NAPL) contamination were simulated using a physically-based hydrogeological model to address hydrogeological uncertainty: one concerns the effect of an ethanol spill on a light NAPL (LNAPL) contaminated area in the vadose zone, and the other is regarding the vapour phase intrusion of volatile organic compounds, in particular, Trichloroethylene (TCE), a dense NAPL (DNAPL), into indoor air through a variably saturated heterogeneous aquifer. The first simulation replicated experimental observations in the laboratory, such as the capillary fringe depressing and the NAPL pool remobilizing and collecting in a reduced area exhibiting higher saturations than observed prior to an ethanol injection. However, the data gap, in particular, on the chemical properties between the model and the experiment caused the uncertainty in the model simulation. The second NAPL simulation has been performed based on a hypothetical scenario where new dwellings in a redeveloped area have the potential risk of vapour phase intrusion from a subsurface source into indoor air because remediation or foundation design might fail. The simulation results indicated that the aquifer heterogeneity seemed the most significant factor controlling the indoor air exposure risk from a TCE source in the saturated zone. Then, the exposure risk was quantified using Monte Carlo simulations with 50 statistically equivalent heterogeneous aquifer permeability fields. The quantified risk (probability) represents the hydrogeological uncertainty in the scenario and gives the information on loss occurrence intensity of redevelopment failure. Probability of failure (or loss occurrence intensity) was integrated with cost of failure (or loss magnitude) to evaluate the risk capital in the hypothetical brownfields redevelopment project. The term “risk capital” is adopted from financial literature and is the capital you can lose from high risk investment. Cost of failure involves economic uncertainty and can be defined based on a developer’s financial agreement with new dwellers to prevent litigation in the case of certain events, such as an environmental event where indoor air concentrations of pollutants exceed regulatory limits during periodic inspections. The developer makes such a financial agreement with new dwellers because new dwellings have been constructed founded on flawed site information, and municipalities may require it if a land use planning approval is required. An agreement was presumed that the developer would repurchase the affected houses from new dwellers immediately, if indoor air contamination exceeded the regulatory limit. Furthermore, the developer would remediate any remaining contamination, demolish the affected houses and build new houses if they were worth investing in. With this financial plan assumed, the stochastic housing price, stochastic inflation rate and stochastic interest rate have been considered to cause the uncertainty in the cost of failure, and the information on these stochastic variables was obtained from the financial market due to its long history of observations. This research reviewed appropriate risk capital valuation methods for hydrogeologists to apply straightforwardly to their projects, with integrating probability of failure (hydrogeological uncertainty) and cost of failure (economic uncertainty). The risk capital is essentially the probability of failure times the cost of failure with safety loading added to compensate investors against hydrogeological and financial uncertainty. Fair market prices of risk capital have been valuated using financial mathematics and actuarial premium calculations, and each method has a specific safety loading term to reflect investors’ level of risk aversion. Risk capital results indicated that the price of the risk capital was much more sensitive to hydrogeological uncertainty than financial uncertainty. Developers can manage the risk capital by saving a contingency fee for future events or paying an insurance premium, given that the price of this risk capital is the price of a contingent claim, subsequent to failure in remediation or in foundation design, and equivalent to an environmental insurance premium if there is an insurance company to indemnify the liability for the developer. The optimal framework of investment strategy in brownfields redevelopment can be built by linkage of addressing and integrating uncertainties and valuating risk capital from the uncertainties. This framework involves balancing the costs associated with each step while maximizing a net profit from land redevelopment. The optimal investment strategy, such as if or when to remediate or redevelop and to what degree, is given when the future price of the land minus time and material costs as well as the contingency fee or insurance premium maximizes a net profit.

This thesis deals with the internalization instrument and with one of the form of provision and compensation of environmental damage, with the environmental insurance. It focuses on the development of this insurance, on the risk assesment, on the determination of premium and on the existing limitations in the insurance contract. The main problem is devoted to the analysis of the Czech insurance market and especially to the compulsory insurance of a major accident. By interrogation of firms and insurance companies, it evaluates a volontary access of the insurance contract conclusion. I try to show that the state intervation don't have to be so well-founded in this domain, because firms are willing to insure volontary and insurance companies are able to offer volontary insurance too. Free decision making of firms would be better and would lead to more effective solution than the state regulation.

This thesis deals with the insurance of environmental risks. Introduction to the whole issue is environmental policy, which is a tool for environmental insurance. The second part is devoted to explain the concepts of risk and environmental risk. This section deals with the specific environmental risks and the possibilities for its management within the insurance company. Another part of the work with insurability of environmental risks and highlights the features of these risks, which it more difficult. The following section deals with legislative responsibility for damage to the environment and is focused mainly on the implementation of Directive 2004/35/EC in the Member States of the European Union. In the part focused on the legislation of the Czech Republic is described environmental harm under the law 167/2008 and marginally also Act No. 353/1999 Coll. as amended č.59/2006 Coll., on the prevention of major accidents. The fifth part is devoted to the modern history of environmental damage with a practical demonstration of selected damage and its consequences. The conclusion focuses on the issue of the insurance market in the Czech Republic. Environmental analyzes offer insurance on the Czech market. It deals with the question of why the market is so small that offer insurance, why is this insurance for insurance companies less attractive, and the effects on the whole issue of the legislation.

The diploma thesis is concerned with current topics of business insurance risks. The goal of thesis is to explore actual business risks in the world and ways of protection, analyze development of business insurance market in the Czech Republic, categorize business insurance risks and in conclusion describe selected insurance products in detail, which will influence the market structure of business insurance most in future I suppose. These product are Key person insurance (Keyman), Directors and Officers liability insurance (D&O) and Environmental insurance. My analysis showed that the most important global business risks currently are economic risks, business interruption risks and risks of natural disasters. Businessmen in the following period will have to deal primarily with the threat of regulation and compliance, maintain continued access to credit and recover from economic recession. The business insurance market is growing slightly and also provides great potential for growth in the future. Major trend in the field of business insurance last years is stagnation and decline of insurance rates. It can be expected that the structure of business insurance market will be affected mostly by liability insurance.

Universally complications exist concerning insurance cover for the risks posed by pollution damage. Environmental insurance cover can be procured under first-party or third-party insurance. For the latter, the polluter's statutory or civil liability is required. The determination of liability for compensation, especially delictual liability, remains problematic. The right to the environment in section 24 of the Constitution creates a general duty of care. The introduction of a strict liability regime can be recommended to alleviate the burden of proving fault and contributory negligence. Where there is multiple or cumulative causation or the exact identity of the polluter is unknown, potential solutions regarding the allocation of liability include a pollution-share, joint and several, market-share or, as a last resort, a proportional allocation. Actionable damages should include property damage, pure economic loss, clean-up costs and natural resource damages, including compensation for reduced aesthetic value. Due to the uncertainty and potential magnitude of pollution-related claims, insurers have attempted to avoid or limit these risks by including specific pollution exclusion and limitation clauses in policies. Statutory regulation of policy content and prescribed wording for clauses could address problems relating to the interpretation of policy provisions. Various other issues such as the coverage of gradual pollution, the effect of the various triggers of coverage and the potential long-tail liability of insurer, the lack of information and the unpredictability of the risk cause further complications for both the insured and the insurer. Policies should preferably be issued on a `claims-made' basis linked to retroactive dates. Mandatory third-party insurance to the benefit of a third party should be required within specific high-risk industries, specifically for the benefit of the prejudiced person or an environmental remediation fund. The right of a prejudiced party to claim directly from the polluter's liability insurer should be introduced. Currently, the focus appears to be more on protection and environmental remediation than on civil compensation. There is an urgent need for the development of statutory and civil liability compensation mechanisms and for an increased regulation of insurance policies and practices to ensure effective insurance cover to provide compensation for environmental damage. / Jurisprudence / LL.D.

Universally complications exist concerning insurance cover for the risks posed by pollution damage. Environmental insurance cover can be procured under first-party or third-party insurance. For the latter, the polluter's statutory or civil liability is required. The determination of liability for compensation, especially delictual liability, remains problematic. The right to the environment in section 24 of the Constitution creates a general duty of care. The introduction of a strict liability regime can be recommended to alleviate the burden of proving fault and contributory negligence. Where there is multiple or cumulative causation or the exact identity of the polluter is unknown, potential solutions regarding the allocation of liability include a pollution-share, joint and several, market-share or, as a last resort, a proportional allocation. Actionable damages should include property damage, pure economic loss, clean-up costs and natural resource damages, including compensation for reduced aesthetic value. Due to the uncertainty and potential magnitude of pollution-related claims, insurers have attempted to avoid or limit these risks by including specific pollution exclusion and limitation clauses in policies. Statutory regulation of policy content and prescribed wording for clauses could address problems relating to the interpretation of policy provisions. Various other issues such as the coverage of gradual pollution, the effect of the various triggers of coverage and the potential long-tail liability of insurer, the lack of information and the unpredictability of the risk cause further complications for both the insured and the insurer. Policies should preferably be issued on a `claims-made' basis linked to retroactive dates. Mandatory third-party insurance to the benefit of a third party should be required within specific high-risk industries, specifically for the benefit of the prejudiced person or an environmental remediation fund. The right of a prejudiced party to claim directly from the polluter's liability insurer should be introduced. Currently, the focus appears to be more on protection and environmental remediation than on civil compensation. There is an urgent need for the development of statutory and civil liability compensation mechanisms and for an increased regulation of insurance policies and practices to ensure effective insurance cover to provide compensation for environmental damage. / Jurisprudence / LL.D.